Finally, I decided it: I'll get a loan on my home (mortgage) to invest!
- Thread starter crgarcia
- Start date
How down is a double ETF when the underlying is down 30%? Does it feel a little worse? How many years did it take you to pay that? IMO there is not garantee that the DOW will go up in the next 10 years. And over that, who knows?
But on the other hand, if you'r willing to take the risk ,it can be a good bet. I would never ever dare to think about it.
But on the other hand, if you'r willing to take the risk ,it can be a good bet. I would never ever dare to think about it.
Wonder if he made a killing????? Congratulations if so!!!
Yeah I'd say that qualifies as making a killing. Assuming his house was worth say 500k, he would have turned his 375k stock portion into just over 2 million not including re-invested dividends.
More proof that sometimes the dumber the trader the more money they make. Who the hell mortgages their home to buy a 2 x ETF? Aside from this fresh new millionaire of course
I wonder if he'll now go all in on DXD for the next few years?
More proof that sometimes the dumber the trader the more money they make. Who the hell mortgages their home to buy a 2 x ETF? Aside from this fresh new millionaire of course
I wonder if he'll now go all in on DXD for the next few years?
You're right investing takes time and patience, but it's flat out gross negligence to mortgage a house and use the money to buy a 2 x ETF. I don't care how sure you are that it's going to work, or how beaten down you think the markets are, that is always a terrible mistake.
Sometimes good trades lose money, and bad trades make money. The result is just the result, but says nothing about how smart a trade was.
This is a good example of a TERRIBLE trade that happened to work. Hardly worth clapping about. I could bet my house the VIX will touch 30 by December and load the boat on calls. If I ended up being right I'd make millions, but how would that result change the fact that the trade would be f'ing retarded !
One of the biggest dangers is when BAD trades make money. That's what gets people into more trouble down the line.
Sometimes good trades lose money, and bad trades make money. The result is just the result, but says nothing about how smart a trade was.
This is a good example of a TERRIBLE trade that happened to work. Hardly worth clapping about. I could bet my house the VIX will touch 30 by December and load the boat on calls. If I ended up being right I'd make millions, but how would that result change the fact that the trade would be f'ing retarded !
One of the biggest dangers is when BAD trades make money. That's what gets people into more trouble down the line.
Disagree completely with the above. I did something similar. I could have paid cash for house a few years ago but given the low stock valuations at that time, high yield dividends (5%ish) and low interest rate on mortgage (1% ish) it looked a great opportunity to buy stocks and take mortgage.
One thing I would add though is that you need to have a plan with what to do if the position goes against you. Rather than leverage up at the start I added to long positions as it went my way. Buying in a panic is a proven historically proven way to make money, but you do need a plan and make sure your not going to become a forced seller. Have a look at the letter Buffett wrote in the middle of the crisis. Hes not dumb and you would have made a lot if you bought at the same time as him.
"Disagree completely with the above. I did something similar. I could have paid cash for house a few years ago but given the low stock valuations at that time, high yield dividends (5%ish) and low interest rate on mortgage (1% ish) it looked a great opportunity to buy stocks and take mortgage."
That isn't even remotely what the OP did. Buying dividend paying stocks when the markets are beaten down is obviously sound investing and doesn't take a genius to figure out. Isn't that what everybody does?
Cashing out of your house and buying a double leveraged ETF is dumb, no matter how well it worked out for him.
The two are night and day, so I really don't know what you're disagreeing with. His stupid trade made a killing, so? The end result doesn't change the fact that it was too risky...
That isn't even remotely what the OP did. Buying dividend paying stocks when the markets are beaten down is obviously sound investing and doesn't take a genius to figure out. Isn't that what everybody does?
Cashing out of your house and buying a double leveraged ETF is dumb, no matter how well it worked out for him.
The two are night and day, so I really don't know what you're disagreeing with. His stupid trade made a killing, so? The end result doesn't change the fact that it was too risky...
You cant say its too risky without knowing his logic, plans if lost money, financial situation, working wife etc. April 2009 SP500 was ca 900 and after the big spike down then rebound earlier that year. May just have been dumb luck but that timing with economy starting to improve and after the sharp drop was ideal. Great time to enter and a reasonable margin of error if wrong. Whether he knew it or not the probabilities were on his side to make the trade. Either x2 ETF or knockout level at 450, not sure what he used, but anyway was a damned good choice as well. Some of the posts suggest he recognized it was undervalued and could absorb some loss on the original position. Luck always plays a part but there seems at least some skill here.
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